Libya eyes 2024 oil and gas bid round

Libya is gearing up to hold an oil and gas licensing round in 2024, the country's state-owned NOC chief Farhat ben Gudara said this week at the CERAWeek by S&P Global conference in Houston.

The bid round — if it happens — would be the first since 2007 and signal Libya's return to business after more than a decade of political instability which has sapped the lifeblood out of the country's upstream sector.

Libya has already signed an $8bn offshore gas project deal with Italy's Eni this year which is set to unlock around 760mn ft³/d of gas to bolster domestic production and exports. But the agreement is mired in uncertainty with several political factions rejecting it.

Eni has yet to take FID on the Structures A&E project, which has a targeted start-up date of 2026.

Ben Gudara also said NOC is working with Eni to cut gas flaring at offshore production facilities as part of a $1.2bn project. This presumably includes the 85mn ft³/d Bouri Gas Utilisation project meant to capture flared gas at the 25,000 b/d Bouri oil field.

"We are coming for big potential. We are coming for more investment in Libya and the deal with Eni is just the first step in a long way for more and more investment," Ben Gudara said.

Libya has been starved of international capex since 2011, with planned projects still stuck on the drawing board. NOC plans to boost output to 2mn b/d within three-five years. The country produced 1.13mn b/d of crude in January, according to Argus estimates.

Libya remains politically fragmented, with loosely aligned western and eastern factions vying for power. UN Libya envoy Abdoulaye Bathily has outlined a plan for the country to hold elections this year, but internal squabbling and competing international interests are key obstacles.

Drilling plans

The NOC chief also confirmed upcoming exploration drilling plans by Eni and BP after the two finalised a long-delayed deal late last year, which was first reported by Argus.

The deal comprises three large blocks, two onshore in the Ghadames basin and one offshore in the Sirte basin, operated by Eni. Ben Gudara said offshore drilling is targeted for 2024.

"That's potentially quite a sizeable asset of gas for export to Europe. I think ‘Area C' is bigger than some countries. It would potentially produce more than [Egypt's] Zohr according to the geological and seismic studies we have done so far."

Egypt's Zohr field is the country's largest, with a current capped capacity of 2.6bn ft³/d. This is equal to around 40pc of Egypt's total output of around 6.4bn ft³/d.

Such large ambitions on the part of Libya would need to be backed up with sizeable investments in infrastructure. Ben Gudara talked about the possibility of an LNG liquefaction plant, presumably a replacement for Libya's Marsa el Brega LNG facility which has been mothballed since the 2011 civil war.

The NOC chief also floated the possibility of building a gas pipeline to Egypt for potential tie-ins to the 7.2mn t/yr Idku facility and the 5.5mn t/yr Damietta terminals which the country plans to expand over the coming years.

While Libya has in recent months talked of boosting its gas export capacity, the reality is that the country currently barely produces enough gas to feed itself. Libya regularly has blackouts in peak summer months because of a lack of fuel for power plants.

Current gas output stands at around 1.3bn ft³/d.

Meeting domestic demand is Libya's most pressing challenge. Gas exports through the 775mn ft³/d Greenstream pipeline — Libya's only gas export outlet — are regularly capped to meet domestic needs and hit their lowest since the 2011 revolution last year, averaging 250mn ft³/d — a third of nameplate capacity. Volumes so far this year have edged up slightly to 265mn ft³/d.

By Aydin Calik